L&T bows out of poker industry

After two decades in the business, L&T Amusement will shut down all its remaining 144 poker machines in the CNMI by December this year.

Eli Arago, L&T vice president for finance, said in an interview yesterday that the management decided to let go of the venture because of declining sales and rising cost of doing business.

“It’s a losing business. We continue to lose over the years as a result of too much competition and the current economic slowdown,” said Arago.

He said that “the playing field is not level.”

“Some operators are not paying the correct taxes. We are paying taxes based on the law but some are getting away with it,” he said.

Further he said there are far too many players already in the market. “The pie is getting smaller and smaller,” he said.

L&T, one of the first companies that started video poker in the CNMI in the mid-’80s, had some 400 machines at the height of its operations. Right now, the company has 144 machines, which operate mainly under the banner name Fun and Games. Of the 144 machines,108 are on Saipan, 24 are on Rota, and 12 are on Tinian.

The closure will mean a loss of some $1.6 million in license fees a year that L&T Amusement pays the local government.

Poker operators pay a $12,000 annual license fee for each machine on Saipan and $10,000 on Rota and Tinian. The Saipan local government gets 50 percent of the license fee or $6,000, while Tinian and Rota local governments get a $4,000 fee from each machine. The rest of the money goes to the general revenue fund.

Right now, L&T poker machines on Saipan contribute $1.3 million to the government. Its Tinian machines give $120,000 while Rota machines pay $240,000 to the government. This excludes their business gross revenue tax.

In terms of island revenue, the L&T poker shutdown will mean a loss of some $648,000 annual local revenue for Saipan, $96,000 for Rota, and nearly $50,000 for Tinian beginning next year.

“We will continue operations only up to the end of the year. All operations will cease by January next year,” said Arago.

44 employees

He said the business shutdown is a hard decision, especially when it involves the termination of employment of its employees.

He said 44 employees, including some local residents, would lose their jobs. These include 34 from Saipan and five each on Rota and Tinian.

He said the management met with the employees Wednesday to inform them of the situation.

“We have fully communicated with the employees. We are deeply saddened to bring them that news, but it’s the reality,” said Arago.

The L&T poker operations represent about 10 percent of the industry.

There are some 1,414 reported poker machines in the CNMI as of late 2005, contributing some $16.4 million to government coffers.

Department of Commerce statistics showed that Saipan has a total of 1,226, Tinian has 106 machines, and Rota has 82.